ASIC’s Kirkland warns on Shield advice misconduct
ASIC commissioner Alan Kirkland says the problems regarding advisers recommending clients in the troubled Shield Master Fund are far from an “isolated incident”.
Speaking at the FAAA annual conference in Brisbane, Kirkland discussed ASIC’s enforcement action around financial advice and specifically referenced advice provided around Shield Master Fund.
ASIC commenced court action against Keystone Asset Management as the responsible entity for Shield in June 2024 and obtained an order for freezing of the assets to preserve Shield’s monies, and managers and receivers were appointed. Subsequently, voluntary administrators were appointed.
He said: “There are too many examples where advice has led to poor, if not devastating, outcomes for individuals.
“A recent investigation into the investments in the Shield Master Fund is a prominent example, where over $480 million was invested in this fund. Potential investors were called by telemarketers who referred them to financial advisers, who encouraged them to roll over their existing superannuation fund and to put some or all of their super into the Shield Master Fund.
“Our work on this matter involved a broad range of individuals and entities, and it’s important to note that some advisers have played a really crucial role in advising consumers to invest in Shield.
“I wish I could say this is an isolated incident, but it’s sadly similar to a pattern of conduct we are seeing far too often where telemarketers recruit people and hand them over to advisers who encourage them to move their super into a platform product or SMSF product, where their retirement savings are then invested in high-risk property or crypto investment which are highly unlikely to be in their best interest.”
He also touched on the biggest areas where the corporate regulator is seeing poor conduct by financial advisers. These are in cases where the advice is not in the clients’ best interest, people who are having their entire retirement funds invested in high-risk products, or cookie cutter advice where large groups of varying clients are receiving the same advice.
“These are the three greatest examples of harm from financial advice we are seeing,” he said. "I am surprised by the scale of poor conduct, I hadn't realised how significant it is."
Kirkland previously stated that the regulator is taking “significant action” against promotions around superannuation switching.
Speaking at FINSIA’s The Regulators event in early November, he said: “The worst behaviour that we see is practices that start with telemarketing or clickbait ads on social media that encourage people to review their superannuation.
“They are often in a well-performing, prudentially regulated superannuation fund and are told it’s terrible and they should tip their money into a platform product or into an SMSF where their money ends up invested in a high-risk property scheme.
“We have significant action underway against those practices, and they are an enormous concern because people’s super is at stake. In the worst cases, if it’s in cryptocurrency, then it can disappear overnight.”
AUTHOR
Laura Dew
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